Opinion
No. 73-462
Decided January 2, 1974.
Motor transportation companies — Public Utilities Commission — Certificate of convenience and necessity — Additional certificate for operation over route already served — R.C. 4921.10 and 4921.12 — Adequate service to be maintained — "Sixty-day order."
1. Where a motor carrier applies for authority to operate over an irregular route or territory, and there exists a certificate holder already authorized to provide the applied-for services, R.C. 4921.10 and 4921.12 prescribe a clear process whereby the Public Utilities Commission must decide whether to grant the applicant's requested certificate of public convenience and necessity.
2. The Public Utilities Commission must determine if a certificate holder fails to adequately meet the public convenience and necessity, and, if such failure appears, it must issue an order to that holder particularizing the ways in which his transport service must be improved. ( Commercial Motor Freight v. Pub. Util. Comm., 156 Ohio St. 360, followed.)
3. Both the existence, and the extent of public convenience and necessity are determined by a 60-day order of the Public Utilities Commission, and neither issue may be redetermined at a subsequent hearing to ascertain compliance with that order.
4. Where it appears that the present holder of a certificate of public convenience and necessity has failed to upgrade his service as required by a 60-day order, and that issuance of a new certificate to an applicant was dependent only upon such failure, the Public Utilities Commission must grant the applicant's requested authority.
APPEAL from the Public Utilities Commission.
On July 23, 1965, Motor Service Company, Inc. (hereinafter Motor Service), applied to the Public Utilities Commission for a certificate of public convenience and necessity "to operate motor vehicles for the transportation of mobile homes and/or house trailers, office trailers, travel trailers and personal effects and/or accessories contained therein or part of [ sic] over irregular routes from and to Clinton, Clermont, Brown, Highland and Adams Counties, Ohio." The application was subsequently amended to exclude Highland County.
Hearings were held on the application, and the attorney examiner issued a report and recommendation, which was adopted in toto by the commission on October 14, 1969. The commission's resulting opinion and order denied Motor Service authority to serve Clinton, Brown and Adams Counties, but found that "a public convenience and necessity exists for the granting of the authority for the transportation of house trailers and/or mobile homes and contents from and to Clermont County, Ohio." That finding was based upon evidence that Morgan Drive Away, Inc. (hereinafter Morgan), a protesting carrier that had previously been the only authorized mobile home transporter in Clermont County, was not providing adequate service.
Pursuant to R.C. 4921.12, the commission issued a 60-day order requiring Morgan to improve its service in four ways:
"(a) Have available suitable equipment for transportation of house trailers and/or mobile homes and contents in a number sufficient to transport the shipping traffic originating or generating from Clermont County, Ohio, to points and places in the state of Ohio and from points and places in the state of Ohio to Clermont County.
"(b) Provide to the mobile home and house trailer shipping public located in Clermont County a staff to receive and service calls from the shipping public and to have available equipment to satisfy the needs of the public within 48 hours after a request for service.
"(c) Implement whatever further changes in operating procedure, equipment and/or personnel as are required in the exercise of sound managerial discretion in order to correct such service deficiencies presently existing in the subject area and further effectuate whatever changes are required to insure the general public of Clermont County of securing the transportation service which is adequate to meet its shipping needs and to insure the subject shipping public that it is capable of securing and providing additional and suitable equipment to meet the continuing shipping needs of the shipping public located in Clermont County, Ohio.
"(d) Provide to the mobile home and house trailer shipping public located in Clermont County, a local and permanent terminal, either by construction, purchase or long-term lease, said terminal to be located within Clermont County, to have permanently assigned and located at such local terminal, equipment satisfactory for the transportation of mobile homes and house trailers."
No appeal was taken from the commission's October 14, 1969, opinion and order.
On December 18, 1969, Morgan filed a report with the commission, detailing its compliance with the 60-day order. After a hearing, the attorney examiner concluded that Morgan had substantially complied with the first three items of the order, but had failed to comply with Item (d). This failure, the examiner said, stemmed from the unenforceability of a purported long-term lease entered into between Morgan and its Clermont County terminal agent, Eola Cochran. Since the protestant had not established a permanent terminal in Clermont County, as ordered, the examiner concluded that a public convenience and necessity still existed, and recommended that Motor Service's application be granted.
The Public Utilities Commission disagreed with the attorney examiner's finding of noncompliance with Item (d). In its May 11, 1972, opinion and order, the commission concluded, in part:
"(2) The protestant, Morgan Drive Away, Inc. has fully complied with the first three provisions of the commission's order dated October 14, 1969 and has substantially complied with the fourth provision of that order in that the lease procured has been established to be legal, valid and enforceable."
Having found that Morgan had improved its services to adequately meet public convenience and necessity in Clermont County, the commission denied Motor Service's application.
The cause is now before this court upon appeal as a matter of right.
Mr. Gerald P. Wadkowski, for appellant.
Mr. William J. Brown, attorney general, and Mr. Walter E. Carson, for appellee.
Mr. James Duvall, for appellee Morgan Drive Away, Inc.
Although Motor Service has assigned several errors to the Public Utilities Commission's decision, the salient question raised is whether the commission acted reasonably and lawfully in finding compliance with Item (d) of its 60-day order. We examine the record to ascertain if the commission's finding is either manifestly against the weight of the evidence, or is not supported by the evidence. Kenton v. Pub. Util. Comm. (1965), 3 Ohio St.2d 71, 73.
In its opinion and order the commission refers to substantial compliance. The use of this adjective caused some confusion, and upon oral argument before this court the commission explained that, for the purposes of this case, any distinction between substantial and full compliance was of no moment. We agree. Further, we feel that such a distinction is useless insofar as determining compliance with any 60-day order, and therefore do not qualify the term "compliance" in this opinion.
Item (d) of the 60-day order required Morgan to acquire a permanent terminal in Clermont County by construction, purchase, or long-term lease. Morgan chose the last method, and contracted with its Clermont County agent, Eola Cochran, for the use of space in her home as a permanent terminal. That contract reads, in pertinent part:
"17. Agent hereby leases, lets and devises unto Morgan the premises hereinafter described for the term and for the considerations hereinafter specified:
"(a) Description. A certain office room located on the ground floor of agent's premises northwest corner.
"(b) Term. The term of this lease shall commence on December 13, 1969 and shall extend through the 12th day of December, 1970 subject to the right of either Morgan or agent to cancel this lease by giving 10 days written notice to the other party.
"(c) Morgan agrees to pay as rental for said premises the sum of $25 per month each month during the term of this lease.
"(d) Agent agrees to maintain said premises free and clear of any expense to Morgan."
The commission based its finding of compliance with Item (d) upon a conclusion that this lease was "legal, valid and enforceable."
The record discloses the following unchallenged facts: Record title to the home wherein Eola Cochran and her husband reside is in Mr. Cochran's sister, Juanita Helton; there exists no written lease between the Cochrans and Mrs. Helton; in return for their paying mortgage installments, insurance premiums, and tax assessments on the property, Mrs. Helton has orally agreed to allow the Cochrans full use of the premises; the home insurance policy is in Mrs. Helton's name; and, an oral agreement exists between Mrs. Helton and Mr. Cochran that the property can only be sold with the latter's consent.
In view of these facts, we are unable to agree that the lease between Morgan and Eola Cochran was legal, valid, and enforceable. The Cochrans' legal interest in Juanita Helton's property, insofar as the record discloses, can only be a tenancy at will. See 51C Corpus Juris Secundum 461, Landlord and Tenant, Section 156; paragraphs 1 and 2 of the syllabus in Say v. Stoddard (1875), 27 Ohio St. 478. Since a tenancy at will is a determinable estate, and cannot be sublet, it follows that Morgan has no enforceable interest in the premises occupied by the Cochrans. See 49 American Jurisprudence 2d 471, Landlord and Tenant, Section 483, and cases cited therein. Further, we observe that while the parties to the purported sublease were Morgan and Mrs. Cochran, both Cochrans apparently held the property as tenants-in-common. Thus, a serious question might be raised by the failure of Mr. Cochran to join in any attempt to sublet the premises. We conclude that the commission's finding of compliance with Item (d) of its 60-day order is unsupported by the record, and is, therefore, unreasonable and unlawful.
The issue next raised is whether the commission's final order, denying a certificate to Motor Service, was so predicated upon its erronerous finding of compliance with Item (d) as to necessitate our reversal of that final order. The commission urges, as follows, that its decision should still stand:
"When the commission first considered the activities, or lack thereof, by Protestant Morgan Drive Away in Clermont County, they obviously concluded from the totality of the circumstances that the public convenience and necessity was not being served. But it is quite easy to see, that if three of the four requirements of the original opinion had been complied with, the absence of a permanent terminal in and of itself did [not] mean that the public convenience and necessity was still being ignored. And such a conclusion is clearly within the discretionary powers of this commission."
Since that argument is based upon a misconception of the statutory process wherein Motor Service's application was considered and rejected, we cannot subscribe to the commission's views.
R.C. 4921.12, read in conjunction with R.C. 4921.10, provides a two-tier process for the granting of a new certificate of public convenience and necessity in certain cases. Where an applicant seeks authority to furnish service over an irregular route or territory, and there exists a certificate holder already authorized to provide that service, the applicant must first show a need for its proposed additional operation. Such a showing by the applicant necessarily involves a demonstration that the service being offered by the existent carrier fails, in some respect, to adequately meet the public convenience and necessity. If the commission agrees, after notice and hearing, that the current certificate holder's service is deficient, the commission must afford the holder a reasonable time within which to improve its service before granting the applicant's request. In practice, an order is issued requiring the holder to remedy any deficiencies within 60 days. Thereafter, another hearing is held to determine whether that carrier has complied with the commission's order. This compliance hearing represents the second tier of the process required by R.C. 4921.12.
Several decisions of this court add significantly to an understanding of the above process. C., C. C. Highway v. Pub. Util. Comm. (1943), 141 Ohio St. 634, held, in the first paragraph of the syllabus:
"Where the Public Utilities Commission finds that public convenience and necessity require the service proposed by a motor transportation company which is an applicant for such a certificate and orders the expansion of the operations of another motor transportation company sufficient to provide the specified additional service upon and over the same route which that company is serving under its existing certificate of convenience and necessity, within sixty days thereafter, such order affects a substantial right of the latter carrier and gives rise to a right of appeal under the provisions of Section 544. General Code [R.C. 4903.13]." See, also, D.G. U. Truck Lines, Inc., v. Public Utilities Comm. (1953), 158 Ohio St. 564, and Buchanan v. Pub. Util. Comm. (1967), 9 Ohio St.2d 155.
Although the C., C. C. Highway case concerned the procedure prescribed by G.C. 614-87 (now R.C. 4921.10), it enunciates a principle equally applicable to R.C. 4921.12. A 60-day order is determinative of the fact that the public convenience and necessity is not being adequately served.
Commercial Motor Freight v. Pub. Util. Comm. (1951), 156 Ohio St. 360, makes clear that a 60-day order must state, with specificity, the ways in which an existing transporter's service is inadequate. The reasons for this are twofold: First, to fully apprise the motor carrier of how to improve his service, and thereby avoid the impending consequences of his failure to meet the public need; second, to enable this court to make a meaningful review of the commission's opinion and order, should that carrier choose to appeal the commission's determination before attempting compliance therewith.
If no appeal is taken from the commission's 60-day order, a subsequent administrative hearing is held to discover whether the certificate holder has complied with the order. At this stage, the commission's scope of inquiry is limited to whether the deficiencies in service to the public, as found in the first hearing and as particularized in the 60-day order, have been corrected by the motor carrier. The commission is not free to waive any of the various requirements of its 60-day order, nor is it empowered to demand compliance beyond that required in the order. To do either would destroy the finality of the original determination that public convenience and necessity was not being adequately met by the certificate holder. This court's decisions in C., C. C. Highway and Commercial Motor Freight, supra, as well as the procedure prescribed in R.C. 4921.12, do not permit the issue of public convenience and necessity to be redetermined at a compliance hearing. See, also, Marks v. Pub. Util. Comm. (1961), 171 Ohio St. 425.
Our conclusion is further buttressed by the commission's own language in In re DeSaavedra (1958), 81 Ohio Law Abs. 402:
"It is, therefore, the opinion of the commission that a carrier against whom a `sixty-day' order has been issued, which carrier has failed to take exception to the provisions of the `sixty-day' order by filing an application for rehearing in accordance with the provisions of Section 4903.10 R.C., must, at the time of compliance hearing, introduce sufficient evidence upon which it may be concluded that it has complied with each and every requirement set forth in the `sixty-day' order. Evidence or argument that the requirements as established in such order were unnecessary or unreasonable, or that a reasonably adequate service can be provided irrespective of these requirements, may only be considered upon a rehearing by the commission of its `sixty-day' order. Should the commission, after review, determine that its requirements were unreasonable, the provisions of the `sixty-day' order can and would be modified. Should the commission fail to so modify its order after rehearing, the protestant has appropriate and adequate recourse by appeal to the Supreme Court."
From the foregoing discussion it is clear that Morgan's failure to comply with Item (d) of the 60-day order leaves the public in Clermont County without adequate transport service, as delineated by the commission's order. Since granting of Motor Service's application was made dependent only upon a showing that Morgan continued in its failure to meet the public convenience and necessity, we see no reason to further delay implementation of adequate service.
The May 11, 1972, order of the commission is reversed, and the cause is remanded to the commission, with directions to grant Motor Service's application.
Order reversed.
O'NEILL, C.J., HERBERT, CORRIGAN, CELEBREZZE, W. BROWN and P. BROWN, JJ., concur.